Friday, July 19, 2013

The Fidor Bank Story: A Lesson in How and Why Banks Must Utilize Social Media

In April this year, computerweekly.com published an article based on
Ovum’s various
studies of the global banking sector where the research agency predicted that “social media will become a significant channel
for retail banks in Europe within three years”.

Let me give you one of the finest examples of a bank utilizing
social media. Germany’s Fidor Bank was established in 2007. It is the world’s first online-only bank
that operates only through the internet and using social media. From
customer service, communications and engagement to new product development,
everything happens on social media at the Fidor Bank.

Fidor Bank’s success through social media is best described by Karl
Finders in his article when he
says, “Fidor currently has more than 200,000
people registered and 150,000 community members. It has €160m worth of
deposits, and its lending totals about €100m. With only 34 staff, no branches
and a cost of only €3.50 to set up a customer with full banking, the overheads
are low compared with traditional banks”. He adds, “Fidor’s customers trust it because it listens to
them all the time through social media and customers have a trusted community supporting
them”.

How did Fidor Bank achieve
this?

At a time when customers’ trust and faith in
their banks was at an abysmal low, courtesy global economic crisis, Fidor
Bank’s leadership took a bold move. They were brave enough to rely entirely on
social media to restore that trust through personalized social media
interactions. They communicated openly about issues
related to banking and personal finance on social media. They opened channels
on Facebook and Twitter for their customers to interact candidly with them,
thus creating a high level of operational transparency. In no time Fidor’s
customers realized that this bank was genuine and trustworthy. So, customers who
came to Fidor Bank, stayed with it. In fact, even the bank’s customer service
is handled by loyal customers on their social community.

Key
takeaways from Fidor Bank’s strategy:

Use social
media to overcome the cost and complexity of traditional banking